The Middle East and Africa (MEA) is a vast and diverse region, which is already tough to cover on ‘normal’ days in a very short column. In these Covid-19 times, it is impossible to analyse even general developments within a sub-region or a single country. Thus, this article will focus on economic aspects and developments in my country of residence, the United Arab Emirates.
Being an international business hub, an attractive tourist destination and home to one of the largest airports, airlines and sea ports of the world, the UAE has shown a great sense of responsibility locally, regionally and globally. Following the example of both Singapore and Hong Kong, the necessary measures were implemented early and swiftly to combat Covid-19, with a focus on the safety of the population.
However, the economic impact of those measures on key sectors, such as food and beverages, hospitality, retail, tourism and other services, has been devastating. Hotels, restaurants, cafes and malls are closed, while all other businesses are operating on minimum speed.
The reaction of business owners varies. Some restaurants immediately put staff on unpaid leave for one to four months and stopped all payments to landlords and suppliers. The construction sector is still active but is reporting defaults on due payments. Generally, all entrepreneurs are on high alert, trying to analyse the dimension of the impact they will have to face in the months to come.
The federal government and the leadership in each emirate have announced massive stimulus packages valued at a combined $34bn, with a special focus on SMEs. The UAE central bank is providing $2bn in collateralised loans at zero costs to ease lending and support the financial sector.
The economic department and all free-trade zones are waiving fees and penalties and some are accepting up to six-month delays in rent payments. The Dubai-based global SME free-trade zone DMCC announced a 100% waiver on all office-sharing permit fees and 30% discount on licence renewal, while some property management firms in Sharjah are offering a 45-day rent waiver to all of their tenants across the country.
Similar to the health impact of Covid-19, its economic impact is also targeting the weakest in our society. Thus, the best ways to minimise the economic casualties are by joint efforts and solidarity between all parties, and by providing direct, unbureaucratic and tangible financial support for SMEs, entrepreneurs and start-ups.
As Dubai's leader Sheikh Mohammed Bin Rashid Al Maktoum has said: “This is the time for unification, co-operation and solidarity to fight the most important enemy of mankind. All differences are minimal in front of this challenge… and the world could overcome it faster if all the strong stood with the weak and all the rich with the poor.”
Mazdak Rafaty is managing partner of Ludwar International Consultancy and SME adviser to the joint Emirati-German Chamber of Commerce. E-mail: firstname.lastname@example.org
This article first appeared in the April-June edition of fDi Magazine. The full digital version of the magazine is available here.